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Canadian economy ends 2014 stronger than expected

Canada’s gross domestic product grew by 0.6 per cent in the final three months of last year, according to the latest Statistics Canada figures. The pace of growth was slower than rates seen in the previous two quarters, but it still managed to defy expectations.

The 0.6 per cent expansion helped Canada’s economy expand at an annual rate of 2.4 per cent in the fourth quarter, slightly above that of our neighbours to the south (2.2 per cent). As a whole, Statistics Canada reports Canada’s economy grew by 2.5 per cent in 2014 after increasing 2.0 per cent in 2013.

Canadian consumers did their part to help boost GDP and strengthen the economy in the final three months of the year. Household spending rose by half of a per cent, contributing to most of the growth in the fourth quarter. Overall, consumer expenditures rose 2.8 per cent to end out the year. It’s worth noting that higher consumer spending caused the household saving rate to fall to its lowest point since 2010.

Economic conditions caused business investment to decelerate in the fourth quarter of last year. As a result, Canada experienced lower business investment in many equipment categories. Even though Canadian GDP finished 2014 quite strongly, weak oil prices will interrupt and weigh on Canadian economic growth in 2015.